\u3000\u3000 Zhongji Innolight Co.Ltd(300308) (300308)
Company announcement: the company released the performance forecast for 2021. It is expected that the annual net profit attributable to the parent company will be RMB 800 million-940 million, with a year-on-year increase of – 7.57% – 8.61%. The net profit deducted from non parent company was 670 million yuan to 790 million yuan, a year-on-year increase of – 12.35% – 3.35%. EPS is 1.09 yuan / share – 1.29 yuan / share.
The performance is in line with expectations, and Q4 continues to improve month on month. The net profit related to the company’s main business maintained a steady growth. The median net profit attributable to the parent for the whole year was 870 million yuan, and the median net profit deducting non attributable to the parent was 730 million yuan, which was close to the same year-on-year. Q4’s net profit attributable to the parent company is expected to be 240 million yuan to 380 million yuan, with a median of 310 million yuan, a year-on-year increase of 41.55%. It maintains a month on month growth trend in the whole year and quarter. Q4 is expected to increase by 9.59% – 73.52% month on month. The sales volume of 400g high-end optical modules has steadily increased, which has occupied the primary sales share of the company, driving the increase of the company’s sales revenue month on month. The company’s sales revenue is mainly in US dollars. Affected by exchange rate fluctuations, the growth rate of converted RMB sales revenue is lower than that of US dollars. The company continued to reduce costs and increase efficiency, improve product competitiveness, and gradually improve gross profit margin. The annual equity incentive expenses reduced the net profit by 57 million yuan. Excluding the impact of equity incentive, the net profit of xuchuang technology is expected to be 950-1.11 billion yuan, a year-on-year increase of 1.7% – 18.84%. The equity transfer is expected to reduce the consolidated net profit of the company by about 20 million yuan, and the non recurring profit and loss events such as investment income and government subsidies will increase the consolidated net profit by about 144 million yuan, of which the investment income and government subsidies will decrease by about 74 million yuan year-on-year.
The data communication 200g / 400g products continue to be in high volume, and the telecom side is driven by the dual Gigabit policy. Driven by the digital economy and metauniverse, major customers of cloud data centers continue to increase capital expenditure. According to dell’orogroup data, the capital expenditure of data centers of top 4 cloud service providers (Amazon, Google, meta and Microsoft) is expected to exceed US $20 billion in 2022, and the capital expenditure of global data centers is expected to increase by 17%. The capital expenditure of cloud manufacturers is positively correlated with the revenue of optical module manufacturers, which is expected to drive the growth of optical module market. At present, the high-end data communication optical module is in the early stage of releasing the demand for 400g / 200g. We expect to accelerate the deployment of 200g / 400g and other high-end optical modules in 2022. The company has a first mover advantage in the 400g / 200g market and has a leading market share in the industry. With the continuous improvement of yield, the revenue and gross profit margin of digital communication business will maintain an upward trend. On the telecom side, with the support of dual Gigabit policy, Chengdu Chuhan is expected to benefit deeply, 10gpon will accelerate the volume, and 5g optical module is expected to be flat. In the field of coherence, the coherent optical modules applied to various rates of Telecom long-distance transmission and 400gzr products applied to data center interconnection (DCI) launched by the company have obtained large-scale batch orders, improved the company’s product matrix and explored new performance growth points.
Continue to focus on the main business of optical modules, and add high-end optical modules with fixed code. The company transferred 100% equity of Zhongji intelligent equipment to major shareholders at a transfer price of 502 million yuan. Zhongji intelligent equipment is engaged in the R & D, manufacturing and sales of high-end motor stator winding manufacturing equipment, and has suffered losses for many times in recent years. This equity transfer will help the company concentrate resources, focus on high-end optical module business, improve profitability and enhance core competitiveness. The company will increase 2.7 billion yuan to increase R & D investment and expand the production capacity layout of high-end optical modules. The investment projects include Suzhou xuchuang optical module business headquarters and R & D center, Suzhou xuchuang high-end optical module production base, Tongling xuchuang high-end optical module production base, Chengdu Chuhan production base technological transformation project, etc. After the completion of the project, the company will increase the production capacity of 1.75 million high-end optical modules and 9.2 million high-end optoelectronic devices for access network every year. The production capacity of high-end optical modules is expected to increase by 14.42% compared with that in 2020, and the production capacity of high-end optoelectronic devices for access network is expected to increase by 31.73% compared with that in 2020. The fixed increase is expected to strengthen the company’s R & D, production and delivery capacity of optical modules, pave the way for the mass production of 800g and above products, form a vertically integrated production capacity from chip packaging, photoelectric components and optical modules, and improve the industry status and performance growth space.
Investment suggestion: the company is a global leader in high-speed optical modules. The scale of 100g products is stable. The large volume of 400g / 200g orders will become the main profit growth point of the company. The orders and share of optical modules in the telecommunications field are expected to be optimized. According to the forecast, we adjusted the shipment volume of some products, relevant expenses and non recurring profit and loss. It is estimated that the net profit of the company from 2021 to 2023 will be 893 million / 1172 million / 1423 million respectively (original forecast: 1105 million / 1373 million / 1685 million), and EPS will be 1.25 yuan / 1.64 yuan / 2.0 yuan respectively, maintaining the buy rating.
Risk warning: the risk that the demand of North American digital communication market is less than expected; The risk that the 5g construction progress is lower than expected; Risks of overseas trade disputes; Risk of intensified market competition
